The Limits of Multiproduct Price Discrimination

Abstract

We consider a multiproduct seller who has access to information about consumer preferences that he can use for second- and third-degree price discrimination. We characterize markets for which such information can lead to the efficient allocation with consumers obtaining the entire surplus gain relative to the profit-maximizing allocation without the additional information. This benchmark is achievable for all markets with a given set of consumer types if and only if it is optimal for the seller to offer only the best product in each market. Analogous results characterize when the “surplus triangle” of Bergemann, Brooks, and Morris (2015) is achievable. (JEL D11, D21, D42, D83)